Other than your home or education, your car might be one of the most expensive investments that you’ll ever make. Should you buy a new or used car? That’s a question that potential buyers regularly face, with neither answer being completely right or wrong. It all depends on your wants, needs, budget and willingness to deal with risk. I’ve put together a list of pros and cons for both options, with the hope that it will help you make your decision!

Buying New

There’s no denying the appeal of a brand new car. Whether it’s the new car smell, fresh paint or clean interior, there is much to be desired.

Pros:

New cars tend to have good reliability records. If anything does go wrong, vehicles purchased from dealerships are often covered by warranty for a set time or up to a specific mileage.

You know that there’s no wear and tear on your new vehicle. You don’t have to worry about hidden damage that could’ve been caused by an accident or the previous owner neglecting to change the oil regularly.

Fuel efficiency has been steadily improving over the years. With fuel costs being a major component of a car’s total cost of ownership, you can expect to pay less in that department.

You may receive a lower interest rate. If you’re seeking a loan from your credit union to help fund a vehicle, you’ll more often than not be offered a lower interest rate on a new car than you would on a used car.

Cons:

Costs are higher. Not only will the vehicle itself cost more, but so will your registration and insurance.

Depreciation happens fast. Not only do they cost more than used cars, but they depreciate in value more quickly too. According to Kelley Blue Book, your new car loses 20% of its value the moment you drive it off the lot, and 60% in just five years.

New cars don’t stay new for long. Scratches, nicks and stains are seemingly impossible to avoid. Those costly monthly payments will last longer than that new car smell.

Buying Used:

Sure, pre-owned vehicles aren’t always as appealing as new, but they can be hard to beat when it comes to financial practicality.

Pros:

Initial cost savings. The original owner will have already absorbed the costly depreciation that occurs in the first few years of ownership, saving you thousands on the cost of your vehicle. also

You’ll save on sales tax, insurance premiums and registration costs. Because the vehicle is worth less, it costs less to buy collision and comprehensive coverage, and registration will become cheaper every year.

Cons:

There may be unknown problems. There is always the possibility that you are investing in somebody else’s problem. You don’t know how the car was treated or why it was traded in. And even if it’s in respectable condition, you’ll still need to perform required maintenance sooner than on a new car.

There may be no warranty. If the car is more than three to five years old, it’s unlikely that the vehicle will be covered by warranty.

You may need a backup plan if your car is in the shop. Not only will you likely have to pay mechanics for more frequent repair needs, but you’ll have to find a way to cope with all the time a used car spends in the shop. Do you have another form of transportation or will you have to rent in the meantime? Those costs add up.

There are benefits and drawbacks to buying both new and used vehicles. Buying a vehicle is personal and whether or not you choose to purchase new or used depends on your preferences. Sit down with your budget before making any purchases and weigh the options of whether new or used will be best for YOU! Do your research and enjoy the ride!